Apple managed to meet analyst expectations regarding its second quarter earnings report, and even plans to dole out additional cash to investors.

For Q2 2013 that ended March 30, Apple posted a net profit of $9.5 billion ($10.09 per diluted share). However, profit was down 18 percent compared to the same period last year; this was Apple's first year-over-year profut decline in nearly 10 years. Revenue came in at $43.6 billion, which was a boost from $39.2 billion in the year-ago quarter.

Analysts expected around $10.07 per share on revenue of $42.5 billion.

Second quarter sales were at 37.4 million iPhones, 19.5 million iPads and a little under 4 million Macs.

“We are very fortunate to be in a position to more than double the size of the capital return program we announced last year,” Tim Cook, Apple’s CEO, said in the statement. “We believe so strongly that repurchasing our shares represents an attractive use of our capital that we have dedicated the vast majority of the increase in our capital return program to share repurchases.”

Apple now has $145 billion in cash, and the board announced that it will return an extra $55 billion in cash to shareholders as part of a capital program that was introduced in March 2012. The board said it will double the $45 billion cash-return program, intending to up the spend on share repurchases and buybacks to $100 billion through the end of 2015.

Many investors weren’t expecting the best figures to come from Apple’s quarterly earnings report this time around, mainly because the Cupertino-based company has had a pretty tough year – and it shows in the company’s stock price. Apple shares have fallen from $702.10 in September to $406.13 at the time of this article. The stock price plunged to $400 after supplier Cirrus Logic Inc. warned investors that its margins had weakened. This is indicative of Apple’s weak sales of flagship devices because Cirrus's chip stock fluctuates mainly with the sales of Apple's devices – since that’s its largest customer.

Apple ditched Google Maps as its main iOS maps app in favor of its own in-house service last year. Apple Maps debuted with the iOS 6 launch in September, but the application failed miserably when it came to navigation and geography. Apple CEO Tim Cook was even forced to apologize for the mishap.

Beyond the mapping issues, Apple had a huge executive shakeup in 2012. In October, Apple Vice President of iOS Software Scott Forstall was booted from the company as a result of the poor job on the maps app. John Browett, head of Apple Retail, was fired at the same time for orchestrating a failed retail hiring formula. A month later, Richard Williamson -- manager of the Apple mapping team – was fired as well.

Competition from Google’s Android operating system and it’s key hardware maker Samsung has posed a huge threat toward Apple, too. Apple's iPhone only represented about 19 percent of worldwide smartphone shipments in 2012 while all Android-powered smartphones accounted for about 70 percent. Android will even beat Apple in the tablet sector this year, according to a new report from IDC.According to IDC, iPad shipments are expected to make up 46 percent of the tablet market for 2013, down from 51 percent in 2012. Android-powered tablets are expected to increase their market share to 49 percent in 2013, up from 42 percent in 2012.

Samsung is expected to break another profit record for its fiscal Q2 2013 quarterly earnings, with an earnings guidance of $7.7 billion USD profit (up from $5 billion USD in the year-ago quarter).

Apple and Google are even branching out to another competitive realm in mobile electronics: wearable technology. Google is now offering its Google Glass headset (which is an augmented reality device) for $1,500 to early adopters and Apple is developing a smart watch, which could be released as early as this year. Microsoft is said to be working on a smart watch, too.

Apple showed a bit of fear in March during the eve of the Samsung Galaxy S IV launch. Phil Schiller, Apple's senior vice president of worldwide marketing, told The Wall Street Journal that Android's fragmentation was "plain and simple" and that Android-powered devices are the kinds of phones that are given as free replacements to feature phones. He also said that iOS is a much more smooth experience because Apple is responsible for both the hardware and software.

While Apple clearly had a ton of problems to contend with over the year, one of the major worries that investors have is whether Apple can continue to create innovative products and keep up with the likes of Samsung/Google. Many have complained that the iPhone has only had very minimal changes over the years, and that competitors are taking greater risks as far as hardware/software design and functionality.

I guess the Apple Armageddon/fails/start of decline/becomes marginalised/it's Mac Vs Windows all over again/Android is winning/ stuff will have to wait till next quarter. Be patient guys - Apple is going to be doomed real soon now.

Bleah... Again (again[again]) No-one is saying that. All anyone in pointing out is that the free ride is over and that Apple us going to have to start working for it again. Simply regurgitating the same products with minor improvements can only last so long. Apple will remain ridiculously profitable in the near term, its just not growing like the past 5 years.

A while ago you askes me when I think profit will fall for the first time in years and I guessed withing the next year? Well, there you have it. Q v Q profit is down... :P

There are various narratives one can run with Apple. One says it's peaked and is now on some sort of downward path, steep or shallow depending on taste. That's possible but the evidence for that is at best inconclusive. An alternative view is that Apple accelerated out of the gates first and fastest when the mobile device revolution started and as a result experienced a period of truly spectacular growth (and as a result grew into the largest tech company in the world) and has now entered a cruise period of growth where the rate slows but growth continues.

Looking forward it's possible that Apple's days of spectacular new product category launches is past, but I personally would not bank on that as exactly the same thing was being said after the iPod and before the iPhone. But even if it is true then Apple is still set up to be the dominant and largest force in the mobile tech business for several years and possibly a decade to come. It is the only company with the whole product service stack (from silicon to retail) and a vast, committed, loyal and above all commercially active user base. Only Samsung is a worthy competitor in the mobile device markets, everyone else is pretty much irrelevant.

As evidence for the optimistic view of Apple's future consider a few data points:

Apple has won the PC wars. The Wintel base is shrinking while Apple's Mac business remains steady and now makes more money than Dell, HP, Lenovo, Asus and Acer all added together.

Apple's iOS platform is the dominant platform measured by pretty much any metric of platform utilisation one can think of.

Apple is sitting on a mountain of cash and has easily the best retail network in the tech business.

Apple makes most of the profits in the entire global handset business.

Apple's iPad business continues to grow at a very fast rate and is likely to remain easily the most popular tablet even as the tablet market moves towards the hundred of millions of units a year scale.

So personally I remain very pleased and optimistic with Apple's performance and look forward to what it does next. Obviously the iPhobe and more rabid end of the Android community have lapped up the media doom fest about Apple, which is understandable as Apple's real world success must be pretty galling for them, but they must sense that under all the media noise there isn't anything wrong with Apple's business which remains big, strong, profitable and resilient.

As I have said previously I am very interested in how the Samsung Google relationship evolves and what Android will look like in the future now that Rubin is gone and Google is reassessing it's Android strategy.

The next few years are going to be such fun to watch, reminds me of the early phase of the PC revolution, the period when the shape of the industry as it was to be for the next couple of decades began to emerge from the mist of events. I wonder if I will make it to see what comes after this revolution.

That would be an extremely optimistic view of things... But then again, look whos talking ;)

In general you put alot of drama and wind into Apples sails. What is likely is that Apple will "plateau" and remain extremely profitable. If they keep stagnating, it will slowly drop and if they go back to innovating it will rise... Not really rocket science. Rumours of the lower priced iPhone turned out to be true... Very likely so will the UI redesign and larger model rumors. If they do that they will probably rise.

"It looks like it features an all uniform plastic polycarbonate shell -- very different to the iPhone 5's sleek aluminum look, but still modern and covetable," Tactus said in a blog post. "It’s also interesting to see that the plastic shell measures in at 0.4-0.6mm thick, however the actual phone might be around 9mm thick, 120mm in height and around 62-65mm in width, which means it’s likely both taller and wider than the iPhone 4/4s!

I don't know why I even bother with you. But here it goes... It's not about rumors its about the supply chain. In order to build 10 million smartphones you need to order 10 million LCD's 10 million front covers 10 million back covers 10 million batteries 10 million CPU's 10 million radios etc. etc. For all of those parts you have lead times anywhere from one to five or six months, maybe more. The vendors that you order those parts from also have their own vendors that they need to order parts from so to make 10 million LCD's the LCD vendor needs 10,000,000 glass substrates 10 million connectors 10 million flex cables 10 million of every little IC. All of those parts have manufacturing and they need to ramp up production so they need to hire people to do the work as well as buy the parts. Is it doesn't get leaked because someone in the know leaked it, it gets leaked because 10,000+ people in the supply chain know it. This is why we all knew the iPhone 5 we have a four inch screen 6 months ahead of his release - because of the supply chain, it can't lie and it can't hide. Everyone involved signs NDA's so no one can come out officially, but the info is there. What is going on right now at Apple and its vendors is a supply chain in motion to build a cheaper iPhone made of plastic in multiple colors . And that's a good thing for a product line with almost zero variety. They're adding some variety. Good move, nothing else to it

Apple also said they made a key price concession (they did not use those words) of the iPhone 4 in China in order to get them into more people's hands. They also hinted that since brand loyalty is 95% with Apple (95% repurchase rate) that this is a key long-term strategy.

quote: What is likely is that Apple will "plateau" and remain extremely profitable. If they keep stagnating, it will slowly drop and if they go back to innovating it will rise...

You see stagnation I see a company whose growth and profits have gone from almost unprecedentedly spectacular to just plain very good. Of course compared to the anaemic Android OEM community, sans Samsung, Apple's profits are still stellar.

The issue of whether Apple's rate of innovation has slowed and if so how important that is for the future health of the company is an interesting one. I have posted before, and I will again if anyone is interested, a simple chronological list of Apple key breakthrough product releases with dates and it clearly shows that the speed of innovation at Apple appears erroneously fast in the rear view mirror and that the gap since the introduction of the iPad in 2010 is not anomalous.

But let's consider the worst case scenario and that Apple has nothing up it's sleeve except the continuous iterative improvement of it's broad product and service lines. How bad is that scenario? Certainly looking back at the PC era one can see that by around the late 1980s pretty much every major innovation, except for the internet, that shaped the PC era was already in place and that other than internet related innovations nothing very new appeared in the PC arena other than simple continuous iterative improvements. That still didn't stop the industry, and those that were successfully in it, such as Intel and Microsoft, from growing hugely in the two decades after 1990.

It's certainly possible that the key features of the mobile device revolution, flat, powerful and networked devices in various sizes that you touch with your fingers, is now in place and all that one will see from now on for many years is continuous iterative improvements (lighter, faster, better batteries, UI tweaks, more bundled services etc). If that is the case then Apple seems, on past performance, to be able play that game as good as anyone.

There is lots of speculation and teasing about the next step to wearable devices but nobody has anything that looks like a breakthrough innovation in that field yet, so all that there is right now is just speculation and we have seen that before (web TV, gaming consoles as gateway devices in the living room, blah, blah). When a paradigm shift happens, such as the PC, the Internet and the arrival of powerful mobile devices, innovation and change happens very quickly and during such periods of paradigm shift it's easy to come to believe that the rate of innovation of the transitionary period will continue into the stable growth and consolidation phase but once the shift is over it becomes clear that the pace of innovation has slowed to a much more sedate pace, until the next big shift comes along. Big paradigm shift don't happen that often, the PC happened in the early 1980s, the internet happened in the mid to late 1990s and the mobile revolution started in 2007. I would love for the next big shift to happen sooner rather than later but it might not.

"You see stagnation I see a company whose growth and profits have gone from almost unprecedentedly spectacular to just plain very good"

That is because you are looking at money and I am looking at products. Not to obnoxious and point out the obvious but product comes first, product drove that profit, but its a wave, not an endless spicket. Apple had something big in 2007 - 2011, and that was a HUGE advantage over the competition. They were are the best platform our there by a longshot. They got big for that reason, but that wave of profits lags behind the tech lead time and public view. 1st you have a great product, then you build marketshare and then you get profit. If you stop, you still have momentum and marketshare, but that dwindles. The simple fact is now that Apple no longer has the superior platform and if (note I said if) they dont come out with some better products, the profit lead will dwindle as well. Simply regurgitation wont cut it any longer now that the competition has caught up. If you are looking at feature parity, the competition has far surpasses Apple.

Tony, not sure why people downrated your post unless they have a beef with you. The only thing I disagree with is that you seem overly optimistic about Mac sales. On the margins, they are being cannibalized by iPad, but Mac sales did not fall as far as the PC sector (nor did Intel's sales for that matter).

What's crazy to me is people have these words come out of their mouths, "Apple just incrementally updating." but Pirks is a troll so I should expect that from a thread he is posting in. Apple created three new product categories, so they have scoreboard on everyone else. I would NEVER call Apple "incrementalists". To do so is intellectually dishonest.

"Apple created three new product categories, so they have scoreboard on everyone else. I would NEVER call Apple "incrementalists". To do so is intellectually dishonest."

You would probably get some argument that Apple "created" those categories. People were buying smartphones from Palm and RIM years before the iPhone existed, and there were tablets too... But I agree they created/jumpstarted it into what it is today. Certainly they changed those markets big-time... And they reaped the profits for that effort, big-time.

Anyhow regardless of how you define the subject mentioned above, what people are saying is that in those markets, after the intial product bump, Apple went into coast mode and incrementally updated. For example the iPhone. In 2007 it was a major improvement. It was so far ahead that it stayed ahead through 2011... In 2012 the competition caught up and in 2013 there are far FAR FAR better phones out than the iPhone5 and Apple seems to be getting passed by on the technical/feature set front in a major way and just coasting on past innovations. Agree or not, that is the argument anyhow.

How about Jason. He recently posted a story in which he repeatedly referenced, and supported, an analyst who claimed that not only would Apple not meet the Street's expectations, Apple would not even meet its own projections!

To Tiffany:

quote: Apple managed to meet analyst expectations regarding its second quarter earnings report, and even plans to dole out additional cash to investors.

Hmmm... it's been a while since I took a class in math theory, but if I remember correctly 43.6 > 42.5 (43.6 != 42.5) and 10.09 > 10.07 (10.09 != 10.07).

While Apple did not beat the Street's expectations by much, it certainly beat them. Additionally, Apple clearly beat its own projections of three months ago.

But it's typical Jason and Tiffany to skew the terminology on this topic.

Has Apple peaked? Maybe. It will depend more upon what new products are introduced over the next nine months than whatever dividends and stock buyback Apple does. No company can pump the stock with buybacks and dividends forever. Eventually even a company with a cash horde like Apple runs out of cash to do this.

Bottom line: Apple needs new products or, at the very least, significant, dramatic updates to its current products.

I was replying to Tony. No-one is saying Apple is "doomed". Slightly lower profits and volume vs record breaking profit and volume is not "doomed" and no-one was ever claiming Apple was. Tony just likes to add teenage girl style drama to everything for his agenda's effect.

"Bottom line: Apple needs new products or, at the very least, significant, dramatic updates to its current products."

All the Android tablets I've tried are slow, cheap pieces of shit. The surface pro didn't pass the nfl.com test I do on tablets (it redirected to the mobile site on a tablet billed as a "full computer"). My last real hope is the rumored Nokia Windows 8 tablet. If that fails, I'll be upgrading my iPad 3 to an iPad 5... :(

Haha, cute, but that site works on mobile devices too, just like every video site does. Isn't the Flash thing tired at this point anyway? I thought the fanboys moved on to complaining about a tired UI or something. Even Adobe and Google abandoned mobile Flash ages ago.

And if you want to talk about profit (the OP) rather than stock price, AAPL's net profit is about in line with GOOG's total gross revenue, and in the prior quarter it exceeded it. They made more money in two weeks than Google did all quarter, which is insane.

Stock price is of course about growth and fear, and profit margins for all handset companies are getting squeezed hard by increased production costs and commodity prices. Both are a danger for any hardware company. Forget these big companies though, on the consumer level compare the increased cost of DDR3 over the last year (8GB DDR3 went up from ~$40 to $60), same with the stabilization in SSD prices (my 512GB SSD actually costs a little more than it did when I bought it last summer). Huge difference from the three years prior. Reduced profit on increased revenue is the product of this.

However, you can still install Flash and use it on 4.1. When it comes down to it, as much as everyone else thinks Flash is dead, until content providers and web sites stop using it, it's still quite alive.

Without the ability to use Flash, there are several times I would have been stuck. Thankfully, that wasn't the case.

Are you referring to what a camera needs to take photos, or the deprecated, nearly obsolete vector animation technology used in the late 1990's that is to be entirely replaced by HTML5 canvas and webGL?

Every handset manufacturer is experiencing similar reductions in profit margins. The most depressed tech stocks right now are handset companies. Apple, HTC, Samsung, Nokia, RIMM, all are trading well below the average price multiple of other techs.

Part of it is legitimate fear (which of these companies will still be big in five years?), part of it is fear created by analysts, and part of it is price manipulation by big money that sold at the top and are squeezing out weak hands so they can buy shares back for cheap.

And these companies are cheap right now. Big money has been accumulating like crazy the last couple weeks while the media cries gloom and doom.